There are many reasons homeowners tend to love cash offers. Without worrying about financing, closing tends to be fast and convenient. Still, there are reasons to think twice about cash offers. If you have a home for sale in Irvine, here are a few pros and cons you should consider if you find yourself receiving an all-cash offer on your home.
Pro: No Financing Issues That Can Break the Deal
Financing issues are a leading cause of real estate deals falling through. When a bank is involved, the sale may fall apart due to issues with the title, appraisal, inspection, and more. You also won’t need to worry about the buyer’s financing falling through at the last minute if his or her financial or credit situation has changed.
Pro: Fast Closing
Financing is the reason most real estate transactions take 30 to 60 days. This time period allows the bank to underwrite the loan, make sure the home is worth at least as much as the mortgage, and fund the mortgage. With a cash buyer, you can close on your home and get the money within 5 to 10 days. However, a fast closing isn’t a guarantee. A cash buyer can still include contingencies for an inspection, appraisal, and more, which could make closing take weeks and won’t save you much time compared to a financed offer.
Pro: You Can Sell Your Home As-Is
Most cash offers come from investors who want to flip a home or turn it into a rental property. Investors may want a home inspection, but they are still likely to buy the home as-is. There are many types of repairs banks require sellers to fix before approving a loan. As a seller, you can avoid expensive repairs that would otherwise be necessary to sell your home to a buyer who is getting a mortgage.
Pro: You May Save on Closing Costs
Most closing costs are associated with getting a mortgage, but not all. Buyers in California are usually responsible for mortgage-related closing costs, while sellers and buyers split other costs like escrow fees and title insurance. However, it’s common for buyers to request sellers pay a portion of their closing costs, which may be several thousand dollars. With a cash offer, you may avoid paying a portion of the buyer’s closing costs.
Con: The Offer May Be Lower
Cash buyers are usually investors looking for the best possible deal. When someone makes a cash offer, it will usually be lower than the asking price. In fact, the offer may be thousands lower than offers from other buyers. If your home needs work, you can expect a bigger discount on the offer since the investor is taking a risk by purchasing the home as-is. However, the lower price may be worth it for a more convenient and faster closing process.
Con: You Need to Protect Yourself
When dealing with cash offers, it’s important to protect yourself against scams. You need proof the buyer has the money, which may be bank statements or just a larger earnest money deposit of 10 or 20 percent.
From Northwood to Shady Canyon, Irvine real estate for sale often attracts buyers who want to make all-cash offers. If you need help navigating the selling process, reach out to the real estate experts at OC Residential. Give one of our friendly agents a call today at 714-454-6304.